Mining acquisitions by Chinese companies surged 63% in the first four months of this year and are forecast to accelerate.

China, the world’s biggest buyer of metals, is back on the hunt for acquisitions, triggered by a decline in prices and a shift in government policy.

Chinese demand for assets may help fuel a doubling in the number of mining deals worldwide this year, according to Jay Leary, law firm Herbert Smith Freehills’s joint global relationship partner for BHP Billiton Ltd., the world’s biggest miner. Copper, iron ore and coal are the top targets, he said.

“Over the past six weeks we have seen a significant step- change in the amount of M&A activity in the mining sector,” Leary said in an e-mail. “Over the next year, we would expect Chinese investors to represent a material proportion of mining global transactions, perhaps as much as 30 percent of transactions.”

Mining acquisitions by Chinese companies surged 63 percent in the first four months of this year and are forecast to accelerate as new rules from today mean most overseas deals under $1 billion don’t need government approval. The decline in prices, with metals from copper to iron ore dipping into bear markets since April last year, has heightened appetites.

“China’s strategic mandate has not changed, but their approach has altered,” said David Wood, Bank of America Corp.’s Australian head of investment banking. “We will see more joint bids, more minority ownership and more partnering on late-stage developments in the right commodities.”

Baosteel, Citic

Wood helped advise state-owned China Minmetals Corp. when it led a group that agreed last month to a $5.85 billion acquisition of Glencore Xstrata Plc’s Las Bambas copper project in Peru. This week Baosteel Group Corp. unveiled a A$1.4 billion ($1.3 billion) deal involving an Australian iron ore and coal company and Citic Group Corp. agreed last February to buy a 13 percent stake in Alumina Ltd.

The Baosteel bid “is a probably a harbinger of similar deals to come,” Michael Elliott, Sydney-based sector leader for Ernst & Young LLP’s global mining practice said by phone. “It’s certainly an example of low-risk deal making.”

Global miners, including BHP, have argued some expectations of the extent of slowing metals demand in China are overdone. Fortescue Metals Group Ltd., Australia’s third-biggest iron ore exporter, said yesterday 200 million Chinese will move to cities by 2020, driving steel demand.

China’s exports and imports unexpectedly rose in April, data released today showed, helping the nation’s leaders put a floor under a slowdown in the world’s second-biggest economy. Overseas shipments rose 0.9 percent from a year earlier, compared with the median estimate for a 3 percent drop in a Bloomberg News survey of analysts.

Data Room

Many deals are motivated by “bigger strategic issues for China, about diversity of supply,” said Jonathan Li, a Melbourne-based corporate partner at Clayton Utz who has also advised China Minmetals. “Their preparedness to do deals is to a large degree influenced by what’s going on with the prevailing policy inside China.”

Melbourne-based OZ Minerals has given 12 interested parties “from every continent” access to a data room as it seeks investment in Australia’s largest unmined copper deposit, which has a planned development cost of A$3 billion, Burgess said last month on a call. Confidentiality agreements mean it won’t reveal whether any of those assessing the project are from China, spokeswoman Rachel Eaves said.

Value Slump

Last year, the value of global mining deals slumped to a four-year low of $83 billion as shareholders demanded greater austerity from managements following an M&A binge that resulted in about $60 billion in industry writedowns.

“There will be more activity in the mining sector in the coming 12 months than that past year — whether the bulk of that comes from China is the big question,” said Robert Dunlop, global head of resources at Macquarie Group Ltd. “There will be a significant influence on global volumes from Asia, but that may come from China, Japan and Korea. We are seeing just as much inquiry from those last two.”

The easing of rules on approvals by China’s National Development and Reform Commission will encourage more deals, said Paul Schroder, a Sydney-based partner at King & Wood Mallesons. The NDRC in January also urged its resource companies to acquire more overseas iron ore assets.

Chinese buyers accounted for 38 percent of the $23 billion of mining deals between January and April 30, compared to 15 percent of the $21 billion in the same period a year ago, according to Bloomberg data.

“They haven’t dispensed with regulation, but it’s certainly a significant relaxation,” said Schroder, who advised China Molybdenum Co. on its $820 million acquisition of Rio Tinto’s Northparkes copper minelast year.